There's a reason the market has been pumping hard the past...

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Hingdog

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05/06/20

23:47

Post #: 45071640
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Originally posted by Corgi ↑

There is no doubt that being able to predict what is going to be the next big hype in the stock market could make you alot of money in the short term and from that perspective, yeah, the market is the leading indicator on what is hot regardless of the current macro economic factors.

There currently is no correlation between the stock markets and the economy. It is a matter of fact that with the rising levels of debt, in both the US & Aus that we are heading into a financial crisis.

Let me explain.

If people aren’t earning as much money as they were when they were working, especially small businesses, they’re not paying their loans. So, the banks are not getting interest payments. They’re getting defaults. When you have a credit bubble, when the economy is built on a foundation of debt, and then something happens to shake that foundation, you have a big problem.

If the debt isn’t being paid, then by definition, you have a financial crisis. That’s why the real estate crisis was a financial crisis. It wasn’t because real estate prices went down. It’s because real estate prices going down meant loans that were collateralized by real estate weren’t getting repaid. And to the extent that the banks had to foreclose, the collateral wasn’t there to make the banks whole. The same thing is happening now. The banks are even more exposed today than they were in 2008. This is an even bigger crisis now than it was in 2008 because we have a lot more debt. We have a lot more borrowers who are in trouble.

You only have to have a look at where all the major major banks, financial institutions & fund managers have their money invested. IMO, If they were to liquidate their large positions in various stocks they owned, it would create a death spiral. It only takes a few hours to wipe out gains made in a few months... But... It might not happen... That is what many are better against.

From a business perspective, with Australian holding the second highest level of household debt in the world, yes, there definitely won't be short on work.

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There's a reason the market has been pumping hard the past couple of months. Now we see why

CI1 Price at posting: 2.9¢ Sentiment: None Disclosure: Not Held
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0 Great analysis

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